Occupy’s campaign against economic and political

inequality continues, although you have to look a little bit below the headlines to see its efforts and influence.

Secretary of Education Arne Duncan just announced that the Federal government would forgive student loans for some of the young people who funneled public money into Corinthian Colleges, Inc.  Corinthian operated a bunch of “colleges” under different brands, including Everest, Heald, and WyoTech for profit.  And Corinthian was only the most egregious practitioner in an extremely offensive and historically profitable sector of the American economy.

For profit schools recruit mostly underprepared and disadvantaged young people with promise of delivering highly marketable skills and status with flexible hours and standards.  Operating a lean business model, the for-profits invest heavily in recruiting students, both through wholesale marketing and direct sales; they invest nothing in student centers, interscholastic sports, libraries, and very very little in faculty.  They also charge a great deal–not compared to private research universities, of course, but much more than the community colleges that represent their most obvious competition.  This only works when students can borrow the tuition money; the federal government provides close to 90 percent of the revenue for most of the for-profits.  (Federal law requires that at least 10 percent of a school’s revenue comes from somewhere else, a law that’s often skirted.)  Understandably, the schools also invest heavily in politics, lobbying Congress effectively to keep the money coming.

About 12 percent of American students attend a for-profit college, which account for nearly 40 percent of the loan defaults. Students who graduate are extremely unlikely to be able to earn enough to afford their loan payments, and the graduation rate is awful (somewhere around 30 percent within six years).

Over the past year, Corinthian has been closing or selling its campuses, under fire from the Justice Department and many state attorneys general for predatory marketing and false advertising.  The bad press hurt Corinthian’s recruitment and its stock price.  To discharge its debts, it declared bankruptcy.  Note: Young people under similar pressures can’t use bankruptcy to discharge student debts.

So, students from the Corinthian schools holf serious debt they can’t discharge, having accumulated credits that won’t transfer, in pursuit of degrees that they can’t finish.

But this is all back story.

In March, organized and publicized by the Debt Collective, 15 Corinthian students announced that they would not pay those loans.  Others have joined them, and the number of resisters continues to grow.  In addition to financial exigency and moral outrage, they cite a provision of federal law which absolves them of debt to schools that broke federal law.  The Debt Collective also arranged for legal representation for the student debtors at Corinthian’s bankruptcy hearing.

The Debt Collective includes veterans of the Occupy campaign, who’ve moved to find other ways to tackle inequality.  When Secretary Duncan announced the settlement, Alexis Goldstein, a member of the collective, was all over the media explaining that Duncan’s deal was partial and crappy (explained here).  Ms. Goldstein is sharp and articulate, and relentlessly on message.  She took a circuitous route to this case, which included an Ivy league degree of her own, seven years working on Wall Street, and then a stint in Zuccotti Park.

Secretary Duncan’s announcement, and whatever modifications made to his program, are responding not only to the legitimate claims of Corinthian’s alumni (word choice?), but also to the politics that The Debt Collective is making.

And it’s hard to see a Corinthian settlement as the end of it.  Corinthian differs from the other for-profits in matters of degree–and there are plenty of graduates and not-quite-graduates of more conventional schools also struggling with debt.

Could forgiveness be contagious?